Philip Taylor

1
Challenges of an ageing labour force extending
working life and age equality
Philip Taylor   Department of Sociology University
of Cambridge  Promoting Active Ageing in Work
Life Oslo, June, 2005
2
Objectives of the presentation

• The history - older workers and the labour market
• The imperative labour shortages and sustainable
  pension systems
• The solution new policies for older workers
• The new challenge ensuring age equality.

3
The history older workers and the labour market

• Long-term decline in labour force participation.
• Until recently public policies encouraged early
  retirement, with collusion between government,
  social partners and older workers.
• Utilisation of early retirement pathways has been
  important e.g. disability benefits.
• Societal obsession with age reflected in the
  labour market.
• Older people viewed as a burden, either blocking
  younger workers progression or as dependent.

4
Labour force participation rates among people
aged 55-64
5
Average age of withdrawal from the labour force
over time
6
The imperative Labour shortages and
sustainable pension systems

• Increasing concerns over the effects of
  population ageing on the sustainability of
  pension systems and labour supply.
• Population ageing may result in
• A marked slowing of labour force growth
• An increase in dependency ratios
• .and a greying of the labour force.

7
European policy

• Stockholm and Barcelona summits in 2001 and 2002
  adopted targets on the employment rate for people
  in the 55-64 age group of 50 per cent by 2010 and
  raising the average age of retirement by 5 years
  by 2010.
• The Equal Treatment Directive obliges governments
  to implement legislation outlawing age
  discrimination by 2006.

8
Trends in employment rates in the EU, Japan and
the USA

• 1997 2000 2001 2002
• 15-64 55-64 15-64 55-64 15-64 55-64 15-64 55-64
  
• EU15 60.7 36.4 63.4 37.8 64.1 38.8 64.3 40.1
• EU25 60.6 35.7 62.4 36.6 62.8 37.5 62.9 38.7
• USA 73.5 57.2 74.1 57.8 73.1 58.6 71.9 59.5
• Japan 70.0 64.2 68.9 62.8 68.8 62.0 68.2 61.6
• Source Eurostat, Labour Force Survey, annual
  averages. OECD Outlook reports for the USA and
  Japan.
• Notes in the USA, data are for 16-64.
• Cited in Increasing the employment of older
  workers and delaying the exit from the labour
  market. Commission of the European Communities.
  Brussels 3.3.2004. COM (2004) 146 Final

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The imperative Labour shortages and
sustainable pension systems

• Against this backdrop
• Early retirement schemes are being ended and
  there is a new focus on flexible retirement.
• Governments are emphasising the importance of
  having a mix-aged labour force.
• Active labour market policies targeting older
  workers are beginning to emerge.

10
National policy actions

• Areas of policy
• Strategic/integrated approaches
• Pension and social security reforms and flexible
  retirement
• Legislation and regulation
• Awareness raising campaigns and support to
  employers
• Employment and training programmes
• Wage subsidies and incentives
• Reform of retirement income systems has dominated
  policy-making.
• Limited progress in the development of integrated
  policies on active ageing.
• Policies aimed at the integration and exclusion
  of older workers also co-exist.

11
Public policy

• Strategic/integrated approaches
• Finlands Programme on Ageing Workers brought
  together different ministries and the social
  partners for a range of initiatives around
• awareness raising, business support, flexible
  retirement, support to health professionals,
  support to older workers, legislative and pension
  reforms.
• UK has a Ministerial Group for Older People to
  coordinate work across departments.
• Though a recent British official report
  concluded
• outstanding need to provide an overall
  framework for work across Government affecting
  older people because, despite progress in joining
  up policy-making, there remains a lack of
  co-ordination in some areas.

12
Public policy

• Pension reform
• Pension ages rising and options for increasing
  retirement flexibility are being implemented.
• Emphasis has been on reducing incentives to
  retire early, not for continuing to work.
• Limited success with partial retirement e.g. in
  Germany transformed into a quasi-early retirement
  scheme.
• Debate on pension reform and extending working
  lives, but retirement as an alternative to
  compulsory redundancy is preferred.
• e.g. Dutch initiatives undermined by senior
  minister arguing for early retirement from the
  civil service.

13
Public policy and collective agreements

• Legislation, regulation and collective agreements
• Piecemeal implementation of the Equal Treatment
  Directive.
• Some European legislation outlawing age
  discrimination predates the Directive e.g.
  Finland.
• Outside of the European Union some countries have
  age discrimination legislation e.g. USA,
  Australian states, Canada, Japan.
• Elsewhere, older workers have specific protection
  against dismissal fixed in collective agreements,
  though not all workers are covered e.g. Germany.

14
The research evidence

• Limited evidence on the impact of legislation.
• Overt discrimination certainly appears to have
  been almost entirely removed.
• But research points to modest effects
• Neumark (2001) reports that the US Age
  Discrimination in Employment Act boosted
  employment rates of those aged under 60 by a
  small amount (eight-tenths of a per cent) but
  boosted those aged 60 or over by more (6).

15
Public policy

• Awareness raising and business support
• UK has a Code of Practice on Age Diversity for
  employers and the Age Positive campaign.
• Germany has had the campaign Fifty Plus They
  Know What to Do.
• Danish Government has sponsored seminars on age
  and employment for business.
• Finnish Programme on Ageing Workers included free
  support to small firms.
• The Netherlands has had campaigning bodies -
  National Office Against Age Discrimination and
  the Taskforce on Ageing Workers.

16
Awareness raising and business support

• UK Code of Practice on Age Diversity (1999 -)
• Sets out principles of non-age based employment
  practices and includes examples of best practice
• An evaluation found little evidence of behaviour
  change, particularly among SMEs
• 2 of companies surveyed stated that they had
  changed policies as a result of the code.

17
Labour market programmes

• UK New Deal 50 plus scheme (2000 -)
• For those out of work for 6 months or more
• Voluntary and open to those inactive on benefits
  as well as those who are registered unemployed
• Practical help from a personal adviser
  job-search skills, travel costs for interviews,
  and work trials
• In work Employment Credit paid for 12 months to
  client on top of wage, replaced by a Tax Credit
• 1,500 in work training grant.

18
Labour market programmes

• New Deal 50 plus (2000 -)
• 110 thousand clients, a minority of those
  eligible
• More effective in assisting those aged nearer 50
• Employment Credit attractive, reducing
  reservation wages, but hardship when it ended
• Training grant hardly used
• Effective in regions with low wages/living costs
• Majority of client work histories of higher
  paid/skilled work, but most found low paid jobs
• Some felt demeaned by low pay/unskilled work, but
  tended to remain in jobs.

19
Lifelong learning

• French inter-sectoral agreement between the
  social partners in 2003 had these key components
• Employees with 20 years experience, and all over
  age 45 eligible for a skills audit after being in
  post for 12 months, and given prioritised access
  to recognition of their work experience.
• After 2 years service employees eligible for a
  careers guidance interview within their company.
• Training passport kept by the employee.
• 20 hour per year training entitlement available
  without age limit.
• Employees losing jobs can utilise their unused
  credit.

20
Framing policy

• Integrated/strategic
• Ageism is not simply a matter of individual
  prejudice it is institutionalised in the labour
  market and other social and economic systems.
• Active ageing is more than just being about
  work.
• Joined up policy making which brings together
  different strands of government is needed
• e.g. consideration of the effects of working
  longer on levels of civil participation and its
  impact on carers.

21
Framing policy

• Age specific or life-course?
• Should there be programmes for older workers?
• Is this not simplistic and even paradoxical,
  given that it is age barriers that are being
  considered?
• Could such programmes stigmatise older workers
  and even embed age barriers still further?
• A greater emphasis on the life-course, with
  attention being given to the factors contributing
  to disadvantages in later life is perhaps
  desirable.

22
Framing policy

• Localised/bottom-up
• Initiatives should be provided on an out-reach
  basis or in local communities.
• For firms ready-made solutions brought from
  outside will be of limited value. Working with
  firms directly or with sector bodies is more
  desirable.
• Sector bodies and trade unions should be
  encouraged to develop their own initiatives.

23
Framing policy

• Nuanced
• We are not one dimensional and policy making
  shouldnt be either
• Consideration of factors such as gender,
  occupation and sector in policy development
• Business support must be provided in
  collaboration with and via the key stakeholders
  i.e. employer groups, trade unions.

24
Framing policy

• Flexible retirement
• Flexible retirement should not be viewed as a
  one way street a means of encouraging more and
  more older workers to stay on.
• Upward flexibility may widen the gulf between
  affluent and poor older people.
• Increased retirement and labour market
  flexibility would allow workers to move to less
  demanding jobs. 
• But genuine choice about deferring retirement may
  be confined to just a few kinds of jobs unless
  age discrimination can be eliminated.

25
Framing policy

• Preventive
• An emphasis on prevention is desirable (though
  remedial action will be required).
• In workplaces this might mean grants for
  job-redesign in order to reduce the risk of
  disability.
•  

26
Framing policy

• Long-term and consistent policy-making
• With the erosion of fixed retirement ages,
  effective and timely support to older workers in
  managing careers and retirement planning is
  essential.
• Will be aided by clarity and consistency in
  social security provision and pension policy.

27
Key issues Professional/managerial perspective

• Age barriers in the labour market are persistent,
  though awareness among employers increasing.
• Growing awareness among government and social
  partners, but a view of early retirement as a
  benefit or right persists, and that it is
  economically justifiable.

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Key issues - Public/popular perspective

• With evidence that early retirement remains
  popular, need for the promotion of quality
  employment, if older workers are going to be
  attracted to employment.
• Key indicator of age equality will be the range
  of employment opportunities available to older
  workers i.e. qualitative as well as quantitative
  indicators are important.

29
Key issues public policy

• Foremost issues relating to age equality in
  employment are
• later retirement from quality work is emphasised
• while early retirement can have deleterious
  consequences, a need to acknowledge that for some
  it is the best recourse.
• Risk that as early exit doorways are shut, for
  some near to retirement, low status and insecure
  employment will be the norm, while for those with
  remote job prospects, a dignified exit will be
  impossible.